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Moving up the announcement of the debt swap
La Nacion
April 15, 2010

They want to make it happen in the coming hours, while from Italy they say that final approval of the offer will only come next week

Mart n Kanenguiser
LA NACION

President Cristina Kirchner landed yesterday from her trip to the United States and received Economy Minister Amado Boudou, with the goal of announcing the debt swap in the coming hours.

And while official anxiousness appears to be hitting the wall of the absence of final approvals from regulatory agencies abroad, official sources don't rule out that today will be the formal launching, in conversations with LA NACION.

At the meeting which unfolded at the Olivos residence, the minister informed the President that today, Finance Secretary Hernan Lorenzino will present the final offer to the CONSOB in Italy.

On that, the Reuters News Agency reported yesterday that the CONSOB "probably will give the green light next week to the offer", citing a source close to the negotiation.

The source said that "the CONSOB's review is still in process." Also, he indicated that "Italian representatives of bondholders are pressuring the agency to closely evaluate the transaction, or to require a greater transparency from Argentine before giving the green light."

For that reason, Lorenzino will meet with officials at CONSOB, which is led by Lamberto Cardia, and possibly with the representatives of the bondholders. Today, the controversial representative of the Italian creditors, Nicola Stock, arrives in Rome.

Nevertheless, such is the official rush that the idea would be to let the details of the initiative be know while still without that "green light" from Italy, the United States, Japan and Luxembourg.

In fact, yesterday the economic team focused on preparing the presentation that the minister will give, in which he will point out the improvement of the public debt indicators, despite Argentina not having access to the markets.

Yields

A report from the stock trading house Tavelli & Co. yesterday said that "the more positive performance of local debt and the units attached to GDP in recent days allowed for a sensible improvement in the value of the offer, and at the same time managed to give the government the chance to go back to make the offer attractive in terms that were originally conceived, without impacting its present value."

According to Tavelli, the market value of the offer will reach 51 to 55.50 dollars for the large and small investor tracks, respectively. Other analysts put an emphasis on pointing out that the bonds that will enter the swap that have the most to gain are the Par, which were given, in principle, to small investors.

In turn, they say that the Discount for the investment funds will should a more moderate rise due to the gains its had already registered in the last few weeks.

A report from Bank of America-Merrill Lynch said that "the Par has had less yield than expected: it has a larger margin for growth, above all in euros, and shouldn't be plagued by institutional investor demand."

Merrill Lynch found that the Discount bonds "would initially retreat after the swap and then have another rise." This view coincides with the traders that predict a massive sell-off of the bonds "the day after" the swap.

With a very small portion of the US$20 billion, Argentine bondholders continue fighting for the government to include in the offer all the late payments on the GDP coupon and the interest on other bonds, something highly unlikely.

Horacio V zquez, of the Association of those Harmed by the Pesification and the Default, told LA NACION that "some are saying that this is a generous offer for the bondholders, but that is garbage, because while the bond has a value of 50 dollars in the swap, upon selling it, it will already be worth 30."

In turn, the Japanese will enter the operation to get out from the bonds that they have not collected on since 2001.

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